Western Area Power Administration; Proposed Rates for Central Valley and California-Oregon Transmission Project

DEPARTMENT OF ENERGY

Western Area Power Administration; Proposed Rates for Central

Valley and California-Oregon Transmission Project

AGENCY: Western Area Power Administration, DOE.

ACTION: Notice of proposed rates.

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SUMMARY: The Western Area Power Administration (Western) is proposing

rates (Proposed Rates) for Central Valley Project (CVP) commercial firm

power, power scheduling service, CVP transmission, transmission of CVP

power by others, network transmission, California-Oregon Transmission

Project (COTP) transmission, and ancillary services. The current rates

expire April 30, 1998. The Proposed Rates will provide sufficient

revenue to pay all annual costs, including interest expense, and

repayment of required investment within the allowable period. The rate

impacts are detailed in a rate brochure to be provided to all

interested parties. The Proposed Rates are scheduled to go into effect

on October 1, 1997, to correspond with the start of the Federal fiscal

year, and will remain in effect through September 30, 2002. This

Federal Register notice initiates the formal process for the Proposed

Rates.

DATES: The consultation and comment period will begin from the date of

publication of this Federal Register notice and will end June 2, 1997.

A public information forum at which Western will present a detailed

explanation of the Proposed Rates is scheduled for March 25, 1997,

beginning at 9 a.m. PST, at the Sierra Nevada Region, Western Area

Power Administration, 114 Parkshore Drive, Folsom, CA 95630-4710. A

public comment forum at which Western will receive oral and written

comments is scheduled for April 22, 1997, beginning at 9 a.m. PDT, at

the same location. Western should receive written comments by the end

of the consultation and comment period to be assured consideration.

ADDRESSES: Written comments are to be sent to: James C. Feider,

Regional Manager, Sierra Nevada Region, Western Area Power

Administration, 114 Parkshore Drive, Folsom, CA 95630-4710.

FOR FURTHER INFORMATION CONTACT: Debbie Dietz, Rates Manager, Sierra

Nevada Region, Western Area Power Administration, 114 Parkshore Drive,

Folsom, CA 95630-4710, (916) 353-4453.

SUPPLEMENTARY INFORMATION: The Proposed Rates for CVP commercial firm

power are designed to recover an annual revenue requirement that

includes the investment repayment, interest, purchase power, and

operation and maintenance expense. A cost of service study allocates

the projected annual revenue requirement for commercial firm power

between capacity and energy. The capacity revenue requirement includes

100 percent of capacity purchase costs, 50 percent of the investment

repayment, interest expense, and power operation and maintenance

expense allocated to commercial power, and 100 percent of fixed

transmission expense. These annual costs are reduced by the projected

revenue from sales of CVP transmission to determine the capacity

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revenue requirement. The energy revenue requirement includes 100

percent of energy purchase costs and 50 percent of the investment

repayment, interest expense, and power operation and maintenance

expense allocated to commercial power. These annual costs are reduced

by the projected revenue from sales of surplus power to determine the

energy revenue requirement. The resulting capacity/energy revenue

requirement split varies from 51 percent allocated to capacity in

fiscal year (FY) 1998 to 44 percent allocated to capacity in FY 2002.

The average capacity/energy revenue requirement split for the five-year

period is 47 percent to capacity and 53 percent to energy.

The Proposed Rates will also include an Annual Energy Rate

Alignment (AERA). The AERA will be applied to firm energy purchases

from Western at or above an average annual load factor of 80 percent.

The AERA is the difference between the estimated market purchase rate

used in the cost of service study for CVP commercial firm power and the

CVP energy rate. The billing for the AERA will occur at the end of each

fiscal year.

The Proposed Rates for CVP commercial firm power, applicable

revenue requirement split between capacity and energy, and the AERA are

provided in Table 1 below.

Table 1.--Proposed Commercial Firm Power Rates

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Total Capacity/

Effective period composte Capacity Energy energy AERA (mills/

(mills/kWh) ($/kW-mo) (mills/kWh) split kWh)

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10/01/97 to 09/30/98........................... 20.64 5.00 10.11 51/49 3.06

10/01/98 to 09/30/99........................... 19.59 4.57 9.98 49/51 3.65

10/01/99 to 09/30/00........................... 19.59 4.51 10.10 49/51 4.01

10/01/00 to 09/30/01........................... 18.59 3.95 10.30 45/55 4.30

10/01/01 to 09/30/02........................... 20.09 4.15 11.35 44/56 3.76

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The Deputy Secretary of the Department of Energy (DOE), approved

the existing Rate Schedule CV-F8 for CVP commercial firm power on

September 19, 1995 (Rate Order No. WAPA-72, 60 FR 52671, October 10,

1995), and the Federal Energy Regulatory Commission (FERC) confirmed

and approved the rate schedule on March 14, 1996, under FERC Docket No.

EF95-5012-000 (74 FERC para. 62,136). The existing Rate Schedule CV-F8

became effective on October 1, 1995, for the period ending April 30,

1998. Under Rate Schedule CV-F8, the composite rate on October 1, 1997,

is 26.50 mills per kilowatt-hour (mills/kWh), the base energy rate is

16.93 mills/kWh, the tier energy rate is 26.48 mills/kWh, and the

capacity rate is $4.58 per kilowatt-month (kW-mo). The Proposed Rates

for CVP commercial firm power will result in an overall composite rate

decrease of approximately 22 percent on October 1, 1997, when compared

with the current CVP commercial firm power rates under Rate Schedule

CV-F8. Table 2 provides a comparison of the current rates in Rate

Schedule CV-F8 and the Proposed Rates along with the percentage change

in the rates.

Table 2.--Comparison of Current and Proposed Rates

[Percentage Change in Commercial Firm Power Rates]

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Total Base

Effective period composite Percent Capacity Percent energy Percent

(mills/kWh) change ($/kW-mo) change (mills/kWh) change

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Current Rate Schedule

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Existing 10/01/97 and thereafter.. 26.50 ........... 4.58 ........... 16.93 ...........

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Proposed Rates

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10/01/97 to 09/30/98.............. 20.64 -22 5.00 +9 10.11 -40

10/01/98 to 09/30/99.............. 19.59 -26 4.57 ........... 9.98 -41

10/01/99 to 09/30/00.............. 19.59 -26 4.51 -2 10.10 -40

10/01/00 to 09/30/01.............. 18.59 -30 3.95 -14 10.30 -39

10/01/01 to 09/30/02.............. 20.09 -24 4.15 -9 11.35 -33

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Adjustment Clauses Associated With the Proposed Rates for CVP

Commercial Firm Power

Power Factor Adjustment

This provision contained in Rate Schedule CV-F8, will remain the

same under the Proposed Rates for CVP commercial firm power.

Low Voltage Loss Adjustment

This provision contained in Rate Schedule CV-F8, will remain the

same under the Proposed Rates for CVP commercial firm power.

Revenue Adjustment

The methodology for the Revenue Adjustment contained in Rate

Schedule CV-F8, will remain the same under the Proposed Rates for CVP

commercial firm power.

Proposed Rate for Power Scheduling Service

The Proposed Rate for power scheduling service is $73.80 per hour

and is based on an estimated time to provide the service. Power

scheduling service provides for the scheduling of resources to meet

loads and reserve requirements.

[[Page 9765]]

Proposed Rates for CVP Transmission

The Proposed Rate for firm CVP transmission service is $0.48 per

kW-mo., an 11.6 percent increase from the existing rate of $0.43 per

kW-mo. currently under Rate Schedule CV-FT2. The Proposed Rate for non-

firm CVP transmission service is 1.00 mill/kWh, an 18.7 percent

reduction in the existing 1.23 mills/kWh rate. Service of firm or non-

firm transmission for one year or less may be at rates lower than the

Proposed Rates.

The Proposed Rates for CVP transmission service are based on a

revenue requirement that recovers: (i) The CVP transmission system

costs for facilities associated with providing all transmission

service; and (ii) the non-facilities costs allocated to transmission

service. These rates include the cost for scheduling, system control

and dispatch service, and reactive supply and voltage control

associated with the transmission service. The Proposed Rates are

applicable to existing CVP firm transmission service and future point-

to-point transmission service.

Proposed Rate for Transmission of CVP Power by Others

Transmission service costs incurred by Western in the delivery of

CVP power over a third party's transmission system to a CVP customer,

will be directly passed through to that CVP customer. Rates under this

schedule are proposed to be automatically adjusted as third party

transmission costs are adjusted.

Proposed Rate for Network Transmission

The Proposed Rate for network transmission service, if offered by

Western, is the product of the network customer's load ratio share

times one-twelfth (\1/12\) of the annual network transmission revenue

requirement. The load ratio share is based on the network customer's

hourly load coincident with Western's monthly CVP transmission system

peak minus coincident peak for all firm CVP (including reserved

capacity) point-to-point transmission service. The Proposed Rate for

network transmission service is based on a revenue requirement that

recovers: (i) The CVP transmission system costs for facilities

associated with providing all transmission service; and (ii) the non-

facilities costs allocated to transmission service. These rates include

the cost for scheduling, system control and dispatch service, and

reactive supply and voltage control needed to provide the transmission

service.

Proposed Rates for COTP Transmission

The Proposed Rates for firm transmission service for Western's

share of the California-Oregon Transmission Project (COTP) are $1.66

per kW-mo. for FY 1998 and $1.12 per kW-mo. for FY 1999 through FY

2002. These Proposed Rates for firm COTP transmission service result in

18.2 percent (FY 1998) and 44.8 percent (FY 1999 through FY 2002)

reductions in the existing rate of $2.03 per kW-mo. The Proposed Rates

for non-firm COTP transmission service are 2.28 mills/kWh for FY 1998

and 1.54 mills/kWh for FY 1999 through FY 2002. These Proposed Rates

for non-firm COTP transmission service result in 18.0 percent (FY 1998)

and 44.6 percent (FY 1999 through FY 2002) reductions in the existing

rate of 2.78 mills/kWh. Service of firm or non-firm transmission for

one year or less may be at rates lower than the Proposed Rates.

The Proposed Rates for COTP transmission service are based on a

revenue requirement that recovers the costs associated with: (i)

Western's participation in the COTP; (ii) the offering of this service;

and (iii) scheduling, system control and dispatch service, and reactive

supply and voltage control needed to provide the transmission service.

The Proposed Rates are applicable to existing COTP transmission service

and future point-to-point transmission service.

Proposed Rates for Ancillary Services

Western will provide ancillary services, subject to availability,

at the Proposed Rates listed in Table 3. The Proposed Rates are

designed to recover only the costs incurred by Western for providing

the service(s). Sales of ancillary services of one year or less may be

at rates lower than the Proposed Rates.

Table 3.--Proposed CVP Ancillary Services Rates

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Ancillary service type Rate

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Transmission Scheduling, System Control and Dispatch Included in appropriate transmission rates.

Service--is required to schedule the movement of power

through, out of, within, or into a control area

Reactive Supply and Voltage Control--is reactive power Included in appropriate transmission rates.

support provided from generation facilities that is

necessary to maintain transmission voltages within

acceptable limits of the system

Regulation and Frequency Response Service--providing Monthly: $1.39 per kW-mo.

generation to match resources and loads on a real-time Weekly: $0.3192 per kW-week.

continuous basis. Daily: $0.0456 per kW-day.

Energy Imbalance Service--is provided when a difference Within Limits of Deviation Band:

occurs between the scheduled and actual delivery of Accumulated deviations are to be corrected or

energy to a load or from a generation resource within eliminated within 30 days. Any net deviations that are

a control area over a single month accumulated at the end of the month (positive or

negative) are to be exchanged with like hours of

energy or charged at the composite rate for CVP

commercial firm power, then in effect.

Hourly Deviation (MW) is the net scheduled amount of Outside Limits of Deviation Band:

energy for the hour minus the hourly net metered (I) Positive Deviations--no charge, lost to the system.

(actual delivered) amount.

(ii) Negative Deviations--during on-peak hours, the

greater of 3 times the Proposed Rates for CVP

commercial firm power or any additional cost incurred.

During off-peak hours, the greater of the Proposed

Rates for CVP commercial firm power or any additional

cost incurred.

Spinning Reserve Service--is providing capacity that is Monthly: $1.14 per kW-mo. plus adder.

available the first ten minutes to take load and is Weekly: $0.2688 per kW-wk. plus adder.

synchronized with the power system Daily: $0.0384 per kW-day plus adder.

Hourly: $0.0016 per kWh plus adder.

Adder for purchasing energy to motor unit will be at

market purchase rate.

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Supplemental Reserve Service--is providing capacity Monthly: $1.14 per kW-mo.

that is not synchronized, but can be available to Weekly: $0.2688 per kW-wk.

serve loads within ten minutes Daily: $0.0384 per kW-day.

Hourly: $0.0016 per kWh.

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Since the Proposed Rates constitute a major rate adjustment as

defined by the procedures for public participation in general rate

adjustments, as cited below, both a public information forum and a

public comment forum will be held. After review of public comments,

Western will recommend the Proposed Rates (and as amended) for approval

on an interim basis by the Deputy Secretary of DOE.

Power and transmission rates for the CVP are established pursuant

to the Department of Energy Organization Act (42 U.S.C. 7101 et seq.)

and the Reclamation Act of 1902 (43 U.S.C. 371 et seq.), as amended and

supplemented by subsequent enactments, particularly section 9(c) of the

Reclamation Project Act of 1939 (43 U.S.C. 485h(c)) and Acts of

Congress approved August 26, 1937 (50 Stat. 844, 850); August 12, 1955

(69 Stat. 719); and October 23, 1962 (76 Stat. 1173, 1191), and Acts

amendatory or supplementary thereof.

By Amendment No. 3 to Delegation Order No. 0204-108, published

November 10, 1993 (58 FR 59716), the Secretary of DOE delegated (1) the

authority to develop long-term power and transmission rates on a

nonexclusive basis to the Administrator of Western; (2) the authority

to confirm, approve, and place such rates into effect on an interim

basis to the Deputy Secretary; and (3) the authority to confirm,

approve, and place into effect on a final basis, to remand, or to

disapprove such rates to the FERC. Existing DOE procedures for public

participation in power rate adjustments (10 CFR Part 903) became

effective on September 18, 1985 (50 FR 37835).

Availability of Information

All brochures, studies, comments, letters, memoranda, or other

documents made or kept by Western for developing the Proposed Rates,

are and will be made available for inspection and copying at the Sierra

Nevada Region Office, located at 114 Parkshore Drive, Folsom,

California 95630-4710.

Regulatory Procedure Requirements

Regulatory Flexibility Analysis

Pursuant to the Regulatory Flexibility Act of 1980 (5 U.S.C. 601,

et seq.), each agency, when required to publish a proposed rule, is

further required to prepare and make available for public comment an

initial regulatory flexibility analysis to describe the impact of the

proposed rule on small entities. Western has determined that (1) this

rulemaking relates to services offered by the Sierra Nevada Region and

therefore is not a rule within the purview of the Act, and (2) the

proposed rates for the services offered by the Sierra Nevada Region

would not cause an adverse economic impact to such entities. The

requirements of this Act can be waived if the head of the agency

certifies that the rule will not, if promulgated, have a significant

economic impact on a substantial number of small entities. By his

execution of this Federal Register notice, Western's Administrator

certifies that no significant economic impact on a substantial number

of small entities will occur.

Environmental Compliance

Pursuant to the National Environmental Policy Act of 1969 (42

U.S.C. 4321 et seq.); the Council on Environmental Quality Regulations

for implementing NEPA (40 CFR Parts 1500 through 1508); and the DOE

NEPA Implementing Procedures and Guidelines (10 CFR Part 1021), Western

conducts environmental evaluations of the proposed rates and develops

the appropriate level of environmental documentation.

Review Under the Paperwork Reduction Act

In accordance with the Paperwork Reduction Act of 1980, 44 U.S.C.

3501-3520, Western has received approval from the Office of Management

and Budget for the collection of customer information in this rule,

under control number 1910-1200.

Determination Under Executive Order 12866

DOE has determined that this is not a significant regulatory action

because it does not meet the criteria of Executive Order 12866, 58 FR

51735. Western has an exemption from centralized regulatory review

under Executive Order 12866; accordingly, no clearance of this notice

by Office of Management and Budget is required.

Issued at Golden, Colorado, February 20, 1997.

J.M. Shafer,

Administrator.

[FR Doc. 97-5256 Filed 3-4-97; 8:45 am]

BILLING CODE 6450-01-P